Using a Special Needs Trust to Benefit Heirs With Disabilities

 Posted on December 06, 2017 in Estate Planning

The holiday season is a time to think of giving – of summoning the charitable impulses and good intentions that bring out the very best version of oneself. It is a time to be grateful for life’s blessings and to reach out and help those who are less fortunate. In doing so, estate planning is a powerful resource in helping others, whether they be family, friends, charities, or individuals in need in a local, regional, national, or global community. 

Estate planning is synonymous with wills and trusts. With regard to the latter, it is possible to create a special needs trust to benefit a disabled individual in your life.

A Trust is a Powerful and Flexible Asset Management Tool 

A trust is a legal agreement that designates both an individual to assume the role of “trustee” and one or more individuals as “beneficiaries.” A trustee will manage your property on behalf of designated beneficiaries at the time of your death or, if you become incapacitated, while you are still living but are no longer able to manage your property on your own. 

It is also possible to create a “living trust” in which a trustee manages property to benefit beneficiaries while you alive and well and not incapacitated in any way. In addition, it is possible to create a trust within a will – a “testamentary trust” that only comes into existence upon your passing. 

Trusts Benefitting Disabled Individuals Are Special Needs Trusts

Disabled individuals, you may be surprised to learn, cannot legally maintain their own trusts. In legal terms, this means that a disabled individual cannot be designated as a trustee. So, to ensure that disabled individuals can still benefit from the intentions and assets of a trust-maker (also referred to as a “grantor”), the law provides for special needs trusts. 

In such a trust, the trustee is designated to manage the assets within the trust. The reason for this is to ensure that beneficiary income through a trust or an inheritance does not jeopardize a disabled individual’s eligibility to qualify for benefits from important programs like Social Security and Medicaid. Thus, the role of a trustee in a special needs trusts allows disabled individuals to benefit indirectly (rather than directly) from trust assets and thereby continue to receive valuable, longstanding services.

Choosing a Trustee and Creating a Special Needs Trust

In choosing a trustee to designate in your special needs trust, think carefully and consult at length with the right candidate. In bringing a trust into legal effect, you can count on the experienced Kane County wills and trusts attorneys at Ariano Hardy Ritt Nyuli Richmond Lytle & Goettel P.C. Call our office at 847-695-2400 to schedule a free consultation.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2117&ChapterID=61